Allchin v Allchin
[2012] NSWSC 1028
•03 September 2012
Supreme Court
New South Wales
Medium Neutral Citation: Allchin v Allchin [2012] NSWSC 1028 Hearing dates: 13/08/12, 14/08/12 Decision date: 03 September 2012 Jurisdiction: Equity Division Before: Associate Justice Macready Decision: (1)The time for the second, third, fourth, fifth, sixth and seventh plaintiffs to bring their application is extended to 2 June 2011;
(2)I refuse to extend time in relation to the application of the first plaintiff;
(3)One half of the first defendant's property at Quakers Road, Mosman is designated as notional estate of the late James Frank Charles Allchin to the extent necessary to satisfy order (4) and any costs order;
(4)In lieu of the entitlements of the second, third, fourth, fifth, sixth and seventh plaintiffs in the will of the deceased, each is to receive a legacy of $125,000 to be paid at the earlier occurrence of:
(i)The passing of three years from the date of these orders; or
(ii)The sale of the first defendant's property at Quakers Road, Mosman;
(5)I will hear submissions on costs.
Catchwords: FAMILY PROVISION - application for further provision by seven children of the deceased - Family Provision Act 1982 - application out of time - factors to consider in determining whether to extend time - whether further provision should be made if time extended - notional estate Legislation Cited: Family Provision Act 1982
Wills, Probate and Administration Act 1898
Testator's Family Maintenance and Guardianship of Infants Act 1916Cases Cited: Baker v R [2004] HCA 45; (2004) 223 CLR 513
Basto v Basto (NSWSC, 8 September 1989, unreported)
Bladwell v Davis [2004] NSWCA 170
Bearns v Bearns-Hayes (NSWSC, Young J, 6 May 1997, unreported)
Butler v Morris [2012] NSWSC 748
Cameron v Hills (NSWSC, Needham J, 26 October 1989, unreported)
Campbell v Chabert-McKay [2010] NSWSC 859
Cetojevic v Cetojevic [2006] NSWSC 431
Cetojevic v Cetojevic [2007] NSWCA 33
Davis v Davis [2012] NSWSC 201
De Winter v Johnstone (Court of Appeal, 23 August 1995)
Easterbrook v Young (1976-1977) 136 CLR 308
Elliott v Elliott (NSWSC, Powell J, 18 May 1984, unreported)
Fancett v Ware (NSWSC, 3 June 1986, unreported)
Golosky v Golosky (NSWCA, 5 October 1993, unreported)
Guskett, Re (deceased) (1947) VLR 211
Lauer, Re (1984) VR 180
Luciano v Rosenblum (1985) 2 NSWLR 65
Marshall v Carruthers [2002] NSWCA 47 Massie v Laundy (NSWSC, 7 February 1986, unreported)
Phillips v Quinton (NSWSC, 31 March 1988, unreported)
Singer v Berghouse (1994) 181 CLR 201
Wade v Harding (1987) 11 NSWLR 551Category: Principal judgment Parties: Catherine Johanna Allchin (first defendant)
Peter Vanderfield (second defendant)
Kim James Allchin (first plaintiff)
Catherine Anne Gray (second plaintiff)
Mark James Allchin (third plaintiff)
Maryanne Jane Carroll (fourth plaintiff)
Christopher James Allchin (fifth plaintiff)
Margaret Anne Allchin (sixth plaintiff)
Sarah Jane Allchin (seventh plaintiff)Representation: J Sexton SC (plaintiffs)
L Ellison SC (defendants)
Church & Grace (plaintiffs)
Bartier Perry (defendants)
File Number(s): 2011/181372
Judgment
This is an application under the Family Provision Act 1982 in respect of the estate of the late James Frank Charles Allchin who died on 11 June 2007 aged 79 years. He was survived by his widow, Catherine Johanna Allchin, who is the first defendant in the proceedings. He was also survived by eight children, seven of whom were from his marriage to June Grace Allchin, his first wife. Those seven children are the plaintiffs in the present proceedings. He is also survived by the adopted child of his marriage with his second wife, both of whom have been given notice of the proceedings and make no claim.
The last will of the deceased
The deceased made his last will on 13 February 2001 in which he appointed his widow, Catherine, and his friend, Peter Richard Vanderfield, as executors. Under his will, he left the whole of his estate to his widow should she survive him by 30 days and this, is thus, the operative part of the will. The substitutional provisions in the will gave the whole estate of the deceased to his seven children of his first marriage and to Michael Patrick Allchin, the child of his second marriage.
Probate has not been sought for a reason which will become apparent. A s 41A grant, pursuant to the Wills, Probate and Administration Act 1898, has been obtained.
The deceased also left a Statement of Wishes dated 13 February 2001 which is in the following terms:
"This statement is not intended to have any testamentary effect and does not have to be disclosed by my executor(s) when applying for a grant in respect of my will.
It is my wish without imposing any trust or binding obligation on my executor(s) and beneficiaries that my wife Catherine Johanna Allchin choose to sell XX Quakers Road, Mosman at a time selected by her in her complete discretion and she should in no way be under any obligation or duress to do so within any given time frame.
It is my strong wish that after my wife sells XX Quakers Road, Mosman that she immediately distribute $75,000.00 to each of my eight (8) children named below:
1.Kim James Allchin
2.Catherine Anne Grey
3.Mark James Allchin
4.Mary-Anne Caroll
5.Christopher James Allchin
6.Margaret Allchin
7.Sarah Jane Amarti
8.Michael Patrick Allchin"
Estate of the Deceased
The estate of the deceased amounted to $442,167, made up principally of managed funds and a $20,000 loan to his son, Mark James Allchin. The debts, as at the date of death, were $16,737.18.
There was a jointly owned property, being the deceased's matrimonial home at Quakers Road, Mosman which, at the date of death, was valued at $10 million. As at February 2012 its value was estimated to be $7 million. There was also jointly owned furniture and jewellery of $40,000 and jointly owned money in current accounts of $91,500.11. Those jointly owned assets passed to the first defendant, the deceased's widow.
I note that the plaintiffs' legal costs in respect of the proceedings amounted to $169,889.41 and those of the defendants amounted to $100,500.
Family history
The deceased was born in May 1928 and, in September 1953, he married his first wife, June. They had seven children, Kim born in 1956, Catherine born in 1959, Mark born in 1962, Maryanne born in 1964, Christopher born in 1967, Margaret born in 1970 and Sarah born in 1971.
It was during 1971 that the deceased separated from his wife, June. In 1973, the deceased met Catherine, his widow. She worked at a firm of architects, Peddle Thorp and Walker, where the deceased was a Principal.
Catherine was born in January 1945 and during 1974 she and the deceased commenced living together in an apartment which the deceased purchased at Neutral Bay for some $42,000.
In September 1979, the marriage of James and June, his first wife, was dissolved. He married Catherine in March 1980. In about 1979, the deceased and Catherine purchased land at Bay Street, Mosman and built a home for themselves there. The Neutral Bay apartment was sold in 1980 for $145,000.
In 1987, a property was purchased in Catherine's name at Bond Street, Mosman for a price of $145,000. In 1988, the deceased retired from his firm, and he then sold the property at Bay Street, Mosman for $2.5 million. Shortly thereafter the deceased and Catherine purchased the Quakers Road property for $2.5 million. That property had an existing house on it and was large enough so it could be sub-divided. In 1991, the property was sub-divided and a new residence built at a cost of some $2 million on the vacant land. Part of the property, which contained the existing dwelling, was sold for $2.2 million.
In 1999, the children of the deceased, who apparently had an interest in the James Allchin Family Trust waived their accrued benefits at the deceased's request and that Trust was wound up.
As I have mentioned, the deceased made his will on 13 February 2001 and he died on 11 June 2007. At that stage, he was 79 years of age and had lived with his second wife for 34 years. They had been married for 27 of those years.
In early July 2007, there was what was described as a reading of the will and at that meeting Catherine offered to prepare her property at Bond Street, Mosman for sale to enable payments of $75,000 to each of the deceased's children.
In May 2008, at a family occasion, there was discussion between Catherine and her stepson, Kim, about the extent of the provision which Catherine had indicated that she was going to provide in advance of what was required under the statement of wishes of the deceased. In that discussion, Kim suggested that each of the children should receive between $200,000 and $300,000 each.
Having heard this, the first defendant, Catherine, then said that she would think about selling Quakers Road which would allow her to pay $200,000 to each of the children. She was somewhat upset because she realised that the children may have been talking about the matter amongst themselves without talking directly to her.
On 11 December 2008, the 18 months' limitation period under the Family Provision Act to make an application expired.
In November 2009, there were further discussions between Kim, Catherine and an agent about pursuing the sale and the agent indicated that a further marketing plan for the sale of the home was not advisable over the Christmas period.
By the end of November 2009, Kim was writing to Catherine asking for some document to protect the children's interest. On 3 December 2009, he sent a document for signature by Catherine which indicated that Catherine proposed to sell her Bond Street property first and distribute $75,000, then sell the Mosman property and distribute $125,000 to each of the children. It foreshadowed the sale by December 2010. This led Catherine to send out on 7 December 2009 a document headed "Family Concerns" in which she set out her intentions. That was not signed by her and at Kim's insistence, on 12 December 2009, she signed a document and sent it out to all of the deceased's children. The form of the document was as follows:
"FAMILY CONCERNS
Your father practiced at the top of his Architectural profession for 45 years and valued the reputation he held for honest and transparent dealings. It is unthinkable that he or myself could be guilty of unethical dealings, especially in matters relating to family.
However, it has been brought to my attention that dissatisfaction and distress has been caused within the family so I write this to communicate and clarify matters to all.
1.It is my intention to sell my property at XX Bond Street and from the proceeds of that sale distribute the sum of $75,000 to seven of the children of my late husband James Allchin, they being:
Kim Allchin
Catherine Gray
Maryanne Carroll
Christopher Allchin
Margaret Allchin
Sarah Allchin
Michael Allchin
To my stepson Mark Allchin the sum of $50,000 will be distributed, taking into account a past debt.
XX Bond Street Mosman is now in the process of being marketed, the agent's tradesmen are currently doing some required works and the sales campaign will begin in February. I hope for a swift and successful campaign and upon completion of the sale, I commit to the distribution of these sums within 45 days of the property being settled.
2.Furthermore, it is, and has been since soon after your fathers passing, my intention to sell my property at xx Quakers Road, Mosman and when that sale is completed I intend to distribute a further $125,000 to the eight children mentioned above, gifting a total of $200,000 to seven of the children, and with consideration to Mark, a total of $175,000. Again distribution of these sums will take place within 45 days of the property being settled. Due to the GFC and a substantial drop in the value of premium real estate in Sydney in the past 12 months or more, the Quakers Rd property remains difficult to sell at this date, despite a longer than 12 month listing with one of Sydney's top real estate agents, Kingsley Yates.
If you have any questions regarding the above matters, you are welcome to contact me, via email, to voice your concerns.
[Signed and dated 12.12.09]"
It is perfectly apparent on the face of this document that she was not prepared to commit to a time frame for the sale of her home.
In early 2010, Bond Street, Mosman was put up for sale and settlement of the sale at $930,000 occurred in March 2010. Thereafter, she paid $75,000 to each of the children except Mark who received $50,000 because he owed some funds to the deceased. The total of those amounts is $575,000. She spent $50,000 on a new car and spent some $30,000 or $40,000 on presenting the Quakers Road property for sale.
On 1 June 2010, Kim emailed Catherine and started to push for the sale of Quakers Road so that the further payment of $125,000 could be paid.
On 15 July 2010, he had his solicitors, Messrs Church & Grace, write to Catherine and require she supply a written proposal for the sale of the Quakers Road property and a written undertaking to pay the $125,000 to each child failing which proceedings would be commenced.
This was responded to on 27 July 2010 by Messrs Bartier Perry, solicitors, who acted for Catherine and noted an agreement that the parties would not commence proceedings without prior notice to Messrs Bartier Perry.
On 6 August 2010, Messrs Bartier Perry wrote and noted that they thought the matter could be resolved. On 17 November 2010, when nothing appears to have resolved, Messrs Church & Grace wrote to Messrs Bartier Perry noting that they would have to commence legal proceedings. It was not until 2 June 2011 that proceedings were commenced.
Extension of Time
The plaintiffs' application was brought two and a half years out of time. It is therefore necessary for the court to consider whether an order extending the time for the plaintiffs to bring their application should be made. Section 16 of the Family Provision Act relevantly reads:
"(1) In this section, "prescribed period" in respect of an application in relation to a deceased person, means:
(a) where the Court has, in an order made under section 17, specified a period in relation to the application-that period, or
(b) in any other case-the period of 18 months after the death of the deceased person.
(2) An order under section 7 shall not be made unless the application for the order is made within the prescribed period in respect of that application or within such further period as the Court may, having regard to all the circumstances of the case but subject to subsection (3), by order, allow.
(3) The Court may not make an order under subsection (2) allowing an application in relation to a deceased person to be made after the end of the prescribed period unless:
(a) the parties to the proceedings concerned have consented to the application being made after the end of that period, or
(b) sufficient cause is shown for the application not having been made within that period.
(4) The Court may make an order under subsection (2) with respect to an application in relation to a deceased person whether or not:
(a) the prescribed period in respect of the application in relation to the deceased person has expired (...)"
There are a number of cases which refer to the principles to be applied in an application for an extension of time. Recently in Davis v Davis [2012] NSWSC 201 Slattery J identified the four matters commonly considered in the exercise of the discretion under s 16. These are:
(1) the explanation given for failure to commence proceedings in time;
(2) the existence and strength of a case for relief under the Family Provision Act;
(3) any prejudice caused by late commencement of proceedings; and
(4) any unconscionable conduct by either side.
In John v John [2010] NSWSC 937 at [44] Ward J considered that sufficient explanation given for the failure to commence proceedings in time was a "threshold requirement" that had to be met before considering the other discretionary factors.
Explanation for the delay
In Lewis v Lewis [2001] NSWSC 321 Hodgson J (as his Honour then was) commented on the meaning of "sufficient cause" in s 16(3) and said at [82] - [83]:
"In general terms, it seems clear that matters relevant to the exercise of discretion to extend time under s 16 include the existence and strength of a case for relief under the Act, the explanation given for failure to commence proceedings in time, any prejudice caused by the late commencement of proceedings, and any unconscionable conduct by either side. The second factor, the explanation, is specifically dealt with in s 16 of the Act, which, in the absence of consent, precludes an extension being granted unless "sufficient cause is shown for the application not having been made within" the prescribed period.
The wording of that provision is a little curious. If read literally, it would appear to be a tautology: the application was not made within the prescribed period, so in some sense there must have been sufficient cause for this to happen. The expression "sufficient cause" must be taken to mean "sufficient explanation" or "sufficient justification or excuse". The question then is, sufficient for what? Again, it cannot be sufficient for the application not having been made, because again that would seem to give rise to a tautology. Rather, it must be something like sufficient in all the circumstances to justify the granting of an extension of time."
In Re Guskett (deceased) (1947) VLR 211, the following was said:
"It is necessary for the applicant to make out a case that will justify the grant of the indulgence sought. He is to show reasons why his failure to apply within the time allowed should be excused. Every case will have to be dealt with on its own facts but it would seem necessary for the applicant to satisfy the court that the circumstances are such as to make it unjust for him to be penalised for being out of time. As moreover he is seeking an indulgence he should apply promptly for an extension of time."
There are a number of cases where a change of heart has not been held to be a sufficient reason. In Re Lauer (1984) VR 180, it was held that the mere fact that the applicant's financial position had deteriorated cannot of itself be a ground for granting an extension of time under the Act nor could the mere fact that the value of the estate had been inflated beyond what might have been expected at the date of the testator's death be such a ground.
Re Lauer was followed by Young J in Bearns v Bearns-Hayes (NSWSC, 6 May 1997, unreported). In that case for a period of two years until late 1994 the plaintiff had no intention of making a claim as she had assurances from her family that her position with her home was secure and she had sufficient income. In late 1994, arguments broke out in the family as a result of which the plaintiff felt abandoned by her family and that she could not rely on the loose arrangements previously in place. His Honour found that this was not a sufficient reason.
The facts of this case differ to those in Bearns v Bearns-Hayes given that there is evidence that Kim and the other plaintiffs sought further provision from their father's estate from at least May 2008. The plaintiffs' explanation for the delay is that they wished the matter to settle out of court, and had received assurances from Catherine that this could occur.
It is apparent that Kim was the one involved in the negotiations with Catherine about resolution of the perceived problems and that he did this on behalf of all his brothers, sisters and stepbrother. He had taken legal advice before the end of 2007 about the possibility of commencing proceedings under the Family Provision Act and was given information about the expiry of the time limit in 18 months and other general matters concerning these claims (T15). In particular Kim said that he had received advice of the possibility of having Quakers Road designated as notional estate and was alert to need to go to court to have such a designation made (T28). There is no doubt that the legal advice he received was passed on to his brothers and sisters.
In 2008 Kim saw a second lawyer and all the plaintiffs met with that lawyer to discuss the matter, most likely in 2008 (T22). By the time of the expiry of the limitation period, they all knew that they would have to go to Court if they wished to make an application in respect of the provision with which they were dissatisfied.
It was a year later, when nothing seemed to have happened further, that at a meeting towards the end of 2009, Catherine was presented with documents to sign to confirm that the matter was proceeding. The document itself was signed on 12 December 2009 as set out above. It is apparent that all she was prepared to do was to promise to make the payments upon sale. She fulfilled the promise to pay $75,000 to each of the children which, of course, was in accordance with what she promised at the reading of the will and which was more than required in the Statement of Wishes by the deceased.
Kim gave evidence that after May 2008, when he had a discussion with Catherine, he believed that Catherine would sell the Quakers Road property and distribute an amount of between $200,000 and $300,000 to each of the children. He said for this reason he did not take steps to make an application under the Family Provision Act. It took one year until the end of 2009 for him to come to the view that there was no progress being made. Hence he approached Catherine, sought and ultimately achieved some written undertaking in return for not commencing proceedings.
The involvement of lawyers in the matter in 2010 led to further delays and ultimately a decision in November 2010 to commence proceedings. Proceedings were not commenced for some six months thereafter and there was no explanation of that delay.
Kim gave evidence that he and the other plaintiffs tried every possible means to resolve the matter to each party's satisfaction without resorting to a court case (T21). He said that at the time he received legal advice in relation to the limitation period, he and the other plaintiffs had understood that there was "some flexibility" with the 18-month time limit, and that they had all hoped to avoid court action (T23).
It is clear that Kim's brother and sisters left it to him to negotiate with Catherine (T25). Mark gave evidence that Kim would report back any legal advice Kim obtained to the plaintiffs via email and it was in one of those emails that Kim told Mark that there was an 18-month time limit on bringing an application for further provision (T50). Mark could not recall whether he was made aware of the time limit before its expiry, but he thought that Kim reported back to him about obtaining legal advice long before December 2009 (T51). Mark said that all of the plaintiffs made the decision to commence proceedings together but that they were being led by Kim (T52).
Maryanne also said that Kim reported back to her about meeting lawyers and having discussions with Catherine (T54). She conceded under cross-examination that within a month of her father dying she was aware that she had an option to go to court for further provision (T56).
Margaret couldn't recall exactly when she was told about the 18-month time limit to commence proceedings, but she was aware of the time limit (T67). Margaret also confirmed that Kim circulated emails reporting on the legal advice he was obtaining; she said that she followed Kim's "guidelines" in relation to the proceedings. Margaret said that Kim told her that Catherine was going to pay each of the plaintiffs between $200,000 and $300,000.
Sarah agreed that she had left the handling of these proceedings up to Kim and that he had reported back to family members (T71). Unlike some of the other plaintiffs, Sarah said that she was aware "right from the start" that the proceedings might end up in court if an out of court settlement was not reached and that she knew about the 18-month time limit within a year or so of her father dying (T72-74). However, she gave evidence that she didn't think that the time limit "mattered" because they were relying on what Catherine had promised to them (T73).
Under cross-examination it was clear that Catherine had not wanted the matter to go to court (T110):
"Q. What was the goal that you both [Kim and Catherine] wanted to achieve?
A. We were going I wanted my stepchildren to have something from the estate and I was very happy at that time to sell my house and distribute the money, given the fullness of time.
Q. Something more than the $75,000 expressed by your husband in
A. Yes.
Q. Yes. And you no longer have that desire, do you?
A. I do not.
Q. And you no longer have that desire because your stepchildren have had the temerity to commence proceedings?
A. There was no need to commence proceedings. We would have gone along in the fullness of time and done what I'd committed to do.
Q. When did you first become aware that there was a time limit for commencing proceedings for provision out of an estate?
A. I had never heard of the Act that is being talked about today. I knew nothing very much about legal proceedings at all.
Q. But you know about it now?
A. I certainly do.
Q. And you now appreciate, don't you, that these things can't be let to go on forever, can they?
A. Everything can be solved with conciliation and fair discussion.
Q. You know that the longer one goes beyond the 18month provision in the Act, the harder it is to get an extension of time, don't you?
A. I know that now.
Q. Yes. You know that these things can't be just left for years, don't you?
A. Sir, I had no idea of any of this. I was living in a loving family, so I believed, where we were together, moving forward to do something that everybody would be happy with."
Indeed it appears that she is now unwilling to provide further provision because proceedings were initiated. In the circumstances where there was ongoing negotiation between Kim, on behalf of the plaintiffs, and Catherine, and some prospect of settlement until at least the end of 2010, I am satisfied that sufficient explanation has been given for the delay in bringing proceedings. The six-month delay after negotiation finished was not explained but is not significant in the context of this case.
I turn now to the other discretionary matters.
The existence and strength of a case for relief under the Act
In Massie v Laundy (NSWSC, 7 February 1986, unreported) Young J appeared to accept a view which was expressed by his Honour Needham J in Fancett v Ware (NSWSC, 3 June 1986, unreported) that there is no purpose in extending the time with respect to a claim which must fail.
In Phillips v Quinton (NSWSC, 31 March 1988, unreported) Powell J, when considering the matter at the substantive hearing, leant to the view that a plaintiff seeking an extension of time under the Testator's Family Maintenance and Guardianship of Infants Act 1916 had to demonstrate not merely a reasonable prospect but at least a strong probability of obtaining substantive relief. That view was not accepted by Hodgson J in Basto v Basto (NSWSC, 8 September 1989, unreported).
In De Winter v Johnstone (Court of Appeal, 23 August 1995) Powell JA referred to this matter and in particular the fact that nowadays the application for extension of time is invariably dealt with at the time of the application for substantive relief. He said at 23:
"In such a case, so it seems to me no extension of time ought to be granted unless it be established (inter alia) that the applicant for an extension of time would, in the event of that extension being granted, be entitled to an order for substantive relief."
Sheller JA considered that it was only necessary to show that the application was not bound to fail. Cole JA seems to have adopted the parties' approach of looking at the strength of the plaintiff's case.
In Bar-Mordecai v Hillston [2004] NSWCA 65, the Court of Appeal (Mason P, Tobias JA and Davies AJA) referred to the passage in Hodgson J's judgment in Lewis, quoted above, and determined that it bore out the correctness of a broad approach that considers the appellant's prospects of success as a factor in the determination of an extension of time application.
In light of Kim's situation in life, discussed below, and the competing claims of Catherine and Kim's siblings I consider that Kim's claim is bound to fail. However I consider that the other plaintiffs' applications have strong prospects of success.
Prejudice caused by late commencement of proceedings
The prejudice to which s 16(3) looks is any prejudice occasioned by the delay in lodging the claim: Cetojevic v Cetojevic[2006] NSWSC 431; John v John. The particular concern is whether the beneficiaries will be unacceptably prejudiced if time were extended: Massie v Laundy.
In this case Catherine is the only beneficiary under the will and will not suffer unacceptable prejudice if time were extended. I have reached this conclusion because Catherine was aware from May 2008 that the plaintiffs might bring a claim against the estate and because Catherine has not taken any step in relation to the estate property that will be to her detriment if time is extended.
Unconscionable conduct
The case of De Winter v Johnstone is also useful because Sheller JA commented on the meaning of "unconscionable". His Honour was dealing with an appeal from Master McLaughlin and referred to the Master's comments to the following effect:
"Unconscionable conduct in this context of course relates to such matters as whether the plaintiff has made an informed decision not to make a claim against the estate and has then decided after the limitation period has expired to make such a claim on account of some change in her financial and material circumstances which has occurred after the expiry of the limitation period."
With regard to the Master's comments, His Honour observed:
"...with all respect I would not have thought this to have been unconscionable conduct. No doubt it depends on the circumstances. However the concept of unconscionable conduct is to be directed towards a deliberate holding off designed to lull beneficiaries into false sense of security. There is nothing to suggest anything of that sort in the present case. "
Cole JA, whilst not determining the issue, said that "it must be doubted whether such a change of mind" (because of some change in the financial and material circumstances of the plaintiff which has occurred after the expiry of the limitation period) constitutes unconscionable conduct. See also Butler v Morris [2012] NSWSC 748 at [114].
There is no evidence in this case that the plaintiffs were deliberately holding off their application to lull Catherine into a false sense of security. In fact Kim had told Catherine in May 2008 that he did not think that $75,000 was an adequate payment to the plaintiffs.
Kim gave evidence that in May 2008 Catherine had told him that she would sell the Quakers Road property "soon" because she could no longer afford to live there (T31). He said that by the end of 2009 he thought that he and the other plaintiffs were being "strung along" with the sale of Quakers Road. The second plaintiff felt that Catherine was "stalling" in relation to the further payment to the plaintiffs (T41).
In Ulcej v Hannink [2008] NSWSC 479 McLaughlin AsJ found that a defendant had acted unconscionably because he had not carried out the provisions of a trust created by the deceased's will; had misrepresented the plaintiff's obligations under the will and had represented to the plaintiff that he would receive financial support from the estate if he vacated the estate's property, and, after the plaintiff had vacated the property, withdrew that offer of financial support.
In this case Catherine's actions are not as grave as the actions of the defendant in Ulcej. However it is clear that Kim (and through him the other plaintiffs) relied upon Catherine's comments in May 2008 that a distribution of more than $75,000 would be made to them. Catherine's intention to distribute a further $125,000 was then confirmed in writing in December 2009. Catherine no longer wishes to provide further provision to the plaintiffs and I have set out above her explanation for this decision.
While the facts of this case fall short of unconscionable conduct on Catherine's behalf, I do not think that the plaintiffs' reliance on her undertakings (albeit the result of some pressure by Kim) were unreasonable, and they have suffered detriment by their failure to initiate an application within the time limit.
Having considered all the above matters and the evidence in this case, I am of the view that Kim has not shown sufficient cause for me to extend time in relation to his application. His application differs from those of his siblings in an important respect, namely that I consider that his application is bound to fail given his situation in life and the competing claims on the deceased's bounty.
The remaining plaintiffs have established sufficient cause and should be granted an extension of time in which to bring their claim.
Eligibility
The plaintiffs are eligible persons. In applications under the Family Provision Act the High Court in Singer v Berghouse (1994) 181 CLR 201 has set out the two stage approach that a Court must take. At 209 it said the following:
"The first question is, was the provision (if any) made for the applicant 'inadequate for (his or her) proper maintenance, education and advancement in life'? The difference between 'adequate' and 'proper' and the interrelationship which exists between 'adequate provision' and 'proper maintenance' etc were explained in Bosch v Perpetual Trustee Co Limited. The determination of the first stage in the two-stage process calls for an assessment of whether the provision (if any) made was inadequate or what, in all the circumstances, was the proper level of maintenance etc appropriate for the applicant having regard, amongst other things, to the applicant's financial position, the size and nature of the deceased's estate, the totality of the relationship between the applicant and the deceased, and the relationship between the deceased and other persons who have legitimate claims upon his or her bounty.
The determination of the second stage, should it arise, involves similar considerations. Indeed, in the first stage of the process, the court may need to arrive at an assessment of what is the proper level of maintenance and what is adequate provision, in which event, if it becomes necessary to embark upon the second stage of the process, that assessment will largely determine the order which should be made in favour of the applicant. In saying that, we are mindful that there may be some circumstances in which a court could refuse to make an order notwithstanding that the applicant is found to have been left without adequate provision for proper maintenance. Take, for example, a case like Ellis v Leeder where there were no assets from which an order could reasonably be made and making an order could disturb the testator's arrangements to pay creditors."
Before turning to the individual situation of the various plaintiffs, I firstly mention one matter, which affects them all, namely, the financial arrangements following upon the separation of their mother and father in 1971.
There was an arrangement between the deceased and his first wife that he would pay $13,000 per annum maintenance for the children. The children were, of course, young, one of them being born in the year of separation. In addition, the deceased met all the education expenses for the children who all attended private schools. Kim, Chris and Michael attended Riverview College. Maryanne, Margaret, Catherine and Sarah attended Monte St Angelo College. Mark attended St Aloysius and Chevalier Colleges. At the time the youngest child turned 18 years, there was a deed between the deceased and his first wife under which all outstanding maintenance matters were resolved and the deceased signed his half share in the matrimonial home to his former wife. In due course it was sold and she retained the proceeds. At that stage, the house was assessed to have a value of $500,000. In addition, during the period when the children were living with the deceased's former wife in the house, the deceased paid for substantial alterations to the building in order to increase the accommodation so there was sufficient room for the children as they grew up.
The maintenance agreed in the original property settlement was not increased during the period of the children growing up and this no doubt put some strains on the family at that time.
The deceased did properly provide for his children's education and their housing even though the housing with his second wife was substantially superior to that which his children enjoyed.
Kim James Allchin
Kim is 54 years old, married and lives with his wife and two daughters aged 14 and 17 years in Mosman. He is an architect and property developer and obviously has been successful. His assets and liabilities which are jointly owned with his wife, Katherine Allchin, are as follows:
Assets$
Property:
XX Esther Rd, Mosman 3,500,000
Vehicles:
Audi A5 Sportback 80,000
Mercedes C250 75,000
Investments:
Cash at Bank 550,000
Unit Trusts and Shares 1,689,000
Superannuation 1,495,000
Artwork 152,000
Furniture, Household Appliances
and Personal Effects etc 100,000
Total Assets 7,641,000
Liabilities
Personal Loans: 165,000
Credit Cards, etc: 25,000
Tax Liability: 0
Total Liabilities 190,000
He gives evidence that his household expenditure is in the order of $207,000 per annum. His income varies from year to year depending upon his activities but in the year ended 30 June 2009, his taxable income was $713,981. In 2008, his income was $1,043,172 which included some capital gains. In 2007, it was $1,831,200.
During the period when Kim was growing up and at university, he needed a car and his father, the deceased, brought him one so he could get from Lane Cove to the Kensington Campus. Also at one stage, in 1981/1982, he lived with the deceased and Catherine for about two years.
It is apparent from evidence that he gives that the deceased and Catherine had a fairly luxurious lifestyle. They travelled regularly and extensively after his father's retirement and before he became ill.
Apart from the provisions mentioned, the deceased was not overly generous as he was a firm believer that his children should earn their own income and should not be spoilt.
As far as the relationship with the deceased was concerned, it seems to have been a normal one although Kim has expressed, from time to time, to his siblings his view that his father was extremely mean. This does not seem to have intruded into his relationship with his father.
Catherine Gray
Catherine is 51 years old, married and lives with her husband and her daughter, Rebecca, who is 17 years of age. She also has a sponsored child aged 8 years. She and her husband have the following assets and liabilities:
Assets $
Property:
XX Swan Street, Gladesville, NSW 950,000
Vehicles:
Mitsubishi Verada, 1998 5,000
Toyota Corolla, 1995 3,000
Investments:
Superannuation 168,000
Furniture, Household Appliances
and Personal Effects etc 85,000
Total Assets 1,211,000
Liabilities
Mortgages (inc lines of credit): 275,000
Credit Cards, etc 6,000
Total Liabilities 281,000
Their annual expenditure is in the order of $135,500 and as at 30 June 2008, her taxable income was $11,366. For the same period, her husband had a gross salary through employment of $145,167. For the year ended 30 June 2010, he had a gross salary through employment of $155,225.
Although Katherine was affected by the break up of her parents, she eventually forgave her father and had a good relationship with him.
In 1978, the deceased gave her a car worth $6,000. In 1984 he paid for her Beauty Therapy course of $2500 and he also paid for her wedding.
Mark James Allchin
Mark Allchin is 49 years old and his children are aged between 8 years and 18 years. His assets and liabilities are as follows:
Property Assets
Residence$197,000
Computers1,400
Furnishings
TV and Stereo1,600
Car 25,000
Cameras800
Equity Assets
Real estate
Stocks
Bonds
Mutual funds
Annuities
Business equity
Cash Reserve Assets
Checking account
Saving account4,000
CDs
Money market
Other
Total Assets$229,800
Liabilities
Home mortgage$222,500
Other mortgage
Bank loans
Credit cards
Personal loans
Other
Total Liabilities$222,500
His monthly expenditure, which includes child support, totals $3580 and his income from his occupation as a live sound engineer is $4400 per month. Mark was also quite upset about his parents' separation but eventually continued to have a good relationship with the deceased. The interest which Mark has in the house set out in his assets above is one which he owns with his new partner, Carol Butler.
Mark had problems with drugs. This fortunately now seems to have ceased. On a number of occasions he moved to different rented premises and, according to Catherine, who I accept, the deceased would sometimes pay the bond and initial rent for Mark at his new abode.
In due course, Mark had a reasonable relationship with his father.
Maryanne Carroll
Maryanne is 46 years old and rents shared accommodation in Willoughby. Her assets, furniture and household appliances are worth $8,000; cash at the bank of $1000. Her rental expenditure is $300 per week and her annual household expenditure is $34,530. Her taxable income for the year ended 30 June 2010 is $51,154, which comes from her work as a horticulturalist.
She also received a car from her father in 1989 and in 1988 was able to live in Bond Street, Mosman at a reduced rent of $90 per week for a period of a year or two. Maryanne conceded this arrangement had been a big help to her family (T57). Catherine gave evidence, which I accept, that there were many times when this rent was not paid because they were struggling financially (T75).
A disagreement between the deceased, Catherine and Maryanne occurred when Maryanne became pregnant to her boyfriend. She moved into his home and had the child rather than staying at home with her mother and imposing herself upon them.
At some stage the relationship between Maryanne and her boyfriend suffered due to Maryanne's illness. At times she was suffering from depression and drinking too much. There is some dispute about what occurred when she wished to go into rehabilitation but the important fact is it was an occasion when her father tried to help. It seems that the relationship with her father was somewhat difficult.
Christopher Allchin
Christopher is 43 years old and lives with his de facto partner at North Balgowlah. His assets and liabilities are as follows:
Assets $
Utility car (business)15000
Stump Grinder (business)15000
General Equipment (business) 2000
Superannuation 0
Cash (fluctuates between $5000 and $10000) 5000
Private Account approx 2000
Total 59000
Note: the above figures are all depreciated values
Liabilities
ATO approx20000
Credit card 0
Chipper (business) $50,000
Truck (business) $60,000
Note: No joint assets with partner
He has an annual household expenditure of $57,300 and a taxable income of $51,890 for the year ended 30 June 2009 from his business as an arborist. He lives in rented accommodation. He has been in a de facto relationship with his partner Samantha for four years and they hope to have a child. Samantha has recently changed employer and her salary has been cut from over $2,000 a week to between $1,000-$1,500 a week (T59).
The deceased insisted that Christopher continue on to the higher school certificate and suggested he do horticulture, although Christopher wanted to be a carpenter. He claims that he was a shy child and he had difficulties with the relationship with Catherine. However, plainly he did have a relationship with his father. On one occasion the deceased took Christopher on an overseas holiday to Noumea (T59).
Margaret Allchin
Margaret is 41 years of age and lives in her home with her de facto partner and their children. Margaret has three children aged 1 to 12 and her de facto partner has two children aged 14 and 17 years. Margaret owns in her own right furniture and household contents of $85,000 and a few thousand dollars in her bank account. She and her partner have a home at Eastwood worth $900,000 and liabilities in the order of $475,000. Margaret does not work and has not worked since 2005. Her partner's income in the year 30 June 2009 was $91,113 and the year before $129,976. Her annual expenditure is in the order of $96,970.
In 2001, the deceased lent Margaret $5,000 to buy a computer which she repaid within two years. This frequently was the situation with any loans made by the deceased to his children. He required the loans to be repaid. Margaret seems to have had a good relationship with her father although a difficult one with Catherine.
Sarah Allchin
Sarah is 39 years old and lives in rented accommodation with her two children aged 5 years and 11 years. Like her sister Maryanne, but unlike her other siblings, all of whom are healthy, Sarah has had some health problems. In 2009 she underwent a detoxification programme for methadone dependency and required substantial counselling which is not unusual. Also, in that year, she broke her leg and was out of work for 10 months. Sarah has little by way of assets. She has furniture and personal affects of $5,000, superannuation of $5,000, a car worth $3,000 and cash at bank of $2000. Her liabilities, which include credit cards and tax, are $17,000.
Generally, there was a good relationship with her father apart from some specific matters. Her father assisted her between 1996 and 1998 by paying $100 per week for three years to support her while she was doing her university degree and he also gave additional amounts of up to $2000 to help with the household bills. In 2000 he gave her a loan of $25,000 for deposit on a house with her ultimate husband and that was paid back in full two years later. After Sarah broke up with her husband, her father paid fees in 2007 of some $7000 for a family mediation and in 2008 she received $3000 from Catherine to purchase a car. She also went on several overseas holidays with the deceased and Catherine (T71).
I am satisfied that Sarah has recovered from her drug problems.
It is also necessary to look at the situation in life of others who make claim on the bounty of the deceased. In this case, of course, the relevant person is the first defendant, Catherine Johanna Allchin, and I turn to her situation in life.
Catherine Johanna Allchin
Catherine Johanna Allchin is 66 years of age. As a five year old she contracted polio, which has left her with some permanent paralysis of her right arm. After her schooling, she took a course in mechanical and engineering drafting at Sydney Technical College and obtained employment in that field. After travelling overseas for some time, she returned and obtained employment as a draftsman with Peddle Thorp and Walker where she met the deceased.
It will be seen from the chronology of events that Catherine sold the home in her name in order to pay the $75,000 to each of the children except for Mark who was paid $50,000 (although Catherine now concedes she should have paid $55,000). Her present assets and liabilities are as follows:
Assets
Residential Property:
XX Quakers Road, Mosman$7,000,000
Motor vehicle: Mercedes Vehicle
Registration Number XXXX $40,000
Investments:
Managed Portfolio - Pension $215,338
Managed Portfolio - Investment $82,724
Cash in Bank - Westpac Mosman $84,000
Citibank US account $8,000
Furniture, Jewellery and Personal Effects $150,000
Total Assets$7,580,062
Liabilities
Credit Cards:
American Express $2,200
Visa $2,100
Total Liabilities $4,300
Net assets (liabilities)$7,575,762
Catherine suggests that her annual expenditure is in the order of $157,584, which includes $20,000 for holidays, and provision for a house keeper, a gardener, accountants and solicitors. At this stage, her income is interest on bank accounts, returns on investments together with income from renting out a self-contained single bedroom flat in her home. This year, the unit is expected to bring in about $10,000. In all, her current income is $40,000 per annum, which is substantially less than her estimate of income. She states she is endeavouring to live within her means by reducing her expenses so she can still manage to retain her home.
The relationship between Catherine and the deceased was one in which they both enjoyed a good lifestyle having regard to his situation at work and his standing with that firm. They frequently travelled, although initially economy and only later when the children were grown up, business class. There are some reports in the evidence of altercations between the deceased and Catherine but there is nothing to suggest that it was not a committed and loving relationship for 34 years with substantial support by Catherine as the deceased became older and suffered from lymphoma in 1994.
In 2004, he was admitted to hospital to remove a part of a foot which had become gangrenous and thereafter was in hospital on numerous occasions until his death in June 2007.
There is no doubt that Catherine played an important part in locating and helping to develop a number of properties during the relationship. This included a two-bedroom apartment in Neutral Bay in 1974 worth $455,000. Catherine spent a lot of time cleaning the apartment and organising the painting and decorating. It was sold in 1978 for $750,000 at a profit.
She was also heavily involved in locating and drawing up plans for the purpose of the property at Bay Street, Mosman. Similarly with the purchase and development of Quakers Road, Mosman.
All of these properties were purchased using the funds provided from the income or other entitlements of the deceased from his architectural practice. Catherine did not have employment during the period of the relationship, for most of the time. She ceased work in 1980 (T99).
Although Bond Street was put in her name and the presumption of advancement would apply, what is important when considering what are appropriate orders in this matter is the source of the funds rather than ownership.
Although some of the deponents in the affidavits deposed as to extensive needs for which they wished to receive some contribution, the case put on behalf of all of the plaintiffs was that each plaintiff should receive a legacy of $125,000. They suggest that if this did not find favour with the court then an alternative would be that a charge be given over Catherine's property to secure such legacies which would be payable either on the sale of the property or her death. It was also suggested that the amount of the legacies would be indexed to reflect inflation up to the time of their ultimate payment.
Determination
Although this is not a widow's claim, such claims are frequently the subject of applications in this Court and give guidance to what provision should be made for a widow. The Court of Appeal in Golosky v Golosky (5 October 1993, unreported) has referred to formulations of the standard to be expected in respect of a widow in terms which refer to the decisions of Powell J in Luciano v Rosenblum (1985) 2 NSWLR 65 and Elliott v Elliott (NSWSC, 18 May 1984, unreported), which was approved by the Court of Appeal on 24 April 1986. In Elliott v Elliott Powell J said:
"Where the marriage of a deceased and his widow has been long and harmonious, where the widow has loyally supported her husband and assisted him to build up and maintain his estate, the duty which a deceased owes to his widow can be no less than to the extent to which his assets permit him to achieve that result; first to ensure that his widow be secure in her home for the rest of her life and that if either the need arises or the whim strikes her she have the capacity to change her home; secondly that she have available to her an income sufficient to enable her to live in a reasonable degree of comfort and free from any financial worry; and, third, that she have available to her a fund to which she might have resort in order to provide herself with such modest luxuries as she might choose and which would provide her with a hedge against any unforeseen contingency or disaster that life might bring."
There have recently been reminders about the limited use of such formulations. In Marshall v Carruthers [2002] NSWCA 47 Young CJ in Eq said:
[73]It must be remembered that Powell J put his proposition as a "broad general rule". However, there is in fact no "standard former spouse" to which one can just apply that proposition as a rule of thumb.
[74]Powell J's broad general rule may not be a good guide as to what the Court will consider as the duty of a testator towards a spouse except in the case of a financially dependent spouse where there is a history of bringing up children with the deceased or in supporting the deceased while he was amassing his fortune. The broad general rule may well be inapplicable in cases of other spouses. Indeed, the cases in the first half of the 20th century show that as far as widowers were concerned, the proposition was quite untrue.
[75]I also take this opportunity to reject Mr Ellison's submission that a person who has a claim as a class (a) eligible person ipso facto has a stronger claim than a person who comes under class (b). Indeed, in many cases, such as where there are infant children, this may not be so."
Palmer J concurred in these sentiments.
The matter was again dealt within more detail in Bladwell v Davis [2004] NSWCA 170. In that case Bryson JA, with whom Ipp JA concurred on this aspect, said:
"[12]There have been many statements in judicial decisions, including decisions in the Court of Appeal, generally to the effect that primacy of some kind is accorded to claims of widows for proper maintenance and advancement in life, including continuance of housing arrangements which they enjoyed during the lifetimes of their late husbands. These statements are not altogether uniform in expression, and should be understood as made in each case in relation to the facts under consideration; and those facts vary widely and in truth are unique to each particular case. " Widow takes all" is not a rule which has been or could be established by judicial decisions: the Court cannot resign the functions which it has under s 7 of the Family Provision Act 1982 in favour of rules of thumb. A rule which was once followed which practically prevented ordering provision for an adult son who was fit to work has been abandoned.
[13]Observations on the claims of widows were made by Powell J in Luciano v. Rosenblum [1985] 2 NSWLR 65 at 69-70 in these terms:
'It seems to me that, as a broad general rule, and in the absence of special circumstances, the duty of a testator to his widow is, to the extent to which his assets permit him to do so, to ensure that she is secure in her home, to ensure that she has an income sufficient to permit her to live in the style to which she is accustomed, and to provide her with a fund to enable her to meet any unforeseen contingencies.'
These observations were not made in the context of a competing claim or proved need by another eligible person, and were introduced by a guarded reference to a general rule and the absence of special circumstances. However they are frequently, almost universally cited in applications where provisions for widows are under consideration.
[14]In Golosky v. Golosky NSWCA 5 October 1993 (unreported) the widow, second wife of the testator, was the applicant and the sons of the first marriage, the will beneficiaries whose interests were affected, were well off and did not assert financial need. The majority (Kirby P, Cripps JA concurring) ordered further provision for the widow, and Kirby P referred to Luciano v. Rosenblum briefly for comparison, but also said:
'Matters such as these rule out an inflexible rule that every spouse or every widow is entitled, as of right and in every case, to look to a testator to provide accommodation for life. Such inflexible rules used to exist in this area, as for example the previous rule that an "able bodied son" was disentitled to a claim under the predecessor to the Act for that reason alone. That rule has now been abandoned in this State. See [ Hunter v Hunter and Ors (1987) 8 NSWLR 573 (CA) 575f] , 580f; cf Anderson v Teboneras and Anor [1990] VR 527 . So should inflexible rules about spousal provision.
[15]In Hertzberg v. Hertzberg [2003] NSWCA 311 provision ordered by Acting Master Berecry for a widow, second wife of the testator, out of a large estate was confirmed by the Court of Appeal. There was no competing claim or circumstance of need of any will beneficiary. McColl JA said at [35] in the context of the claim of a widow for the matrimonial home (which in this case the claimant owns):
'His Honour's judgment recognised the community expectation that a testator should make provision for a widow to ensure that she can lead an independent and dignified life. That prospect is diminished when the widow does not have the benefit of the fee simple, but rather, a right of occupation of her home with a provision for expenses associated with that right being left in the hands of the executors. In this case the situation was exacerbated where, regrettably, the previously affectionate relationship between the appellants and the respondent had, as Acting Master Berecry found, completely broken down following the execution of the deed. Thus the situation in which the deceased may well have contemplated he had left the respondent appeared to have altered.'
The statement in the first sentence of this passage should be understood in its context of a claim in a very large estate where there was no competing claim based on need.
[16] In Sayer v. Sayer [1999] NSWCA 340 at [34] Sheller JA (with whom Davies AJA concurred) accorded primacy to the claim of a widow (of a second marriage) over the claim of a granddaughter who was an eligible person "in the circumstances and in accordance with prevailing community standards." This does not in my opinion express any general principle of paramountcy.
[17]In Cropley v Cropley [2002] NSWSC 349 (at 56) Barrett J said:
'When it comes to claims by adult children, it can be said at once that, if there is a competing claim by the widow and all claims cannot be fully accommodated, the widow's claim should be afforded precedence in the sense that a demonstrated requirement for the allocation of resources in aid of the widow must be satisfied before any similarly demonstrated requirement for the allocation of resources in aid of an adult child. That a widow's claim to maintenance out of the estate of her deceased husband is a claim which is "paramount" and "of a high order" is borne out by the judgments of Sheller JA in Sayer v Sayer [1999] NSWCA 340 (Davies AJA concurring) and Blackmore v Allen [2000] NSWCA 162 (Priestley JA and Foster AJA concurring). In the former case, Sheller JA described the relativities between the claims of the widow and those of an adult grandchild applicant (Francesca) as follows:
In my opinion, the question is whether [the grandchild] has satisfied the Court that there is, in the circumstances and in accordance with prevailing community standards ( Permanent Trustee v Fraser (1995) 36 NSWLR 24 at 46 ), sufficient in the estate to provide for the widow's proper maintenance and advancement in life and yet leave some amount out of which provision can be made for her.'
This was accepted as an accurate statement of the law by Palmer J in Latimore v Latimore (2003) NSWSC 364 at [59]. At [57] Barrett J proceeded to approach the applications according to the two stage approach described in Singer v Berghouse (1994) 181 CLR 201.
[18]In my respectful view there is an inconsistency between an approach, in the context of competing claims, to the claims of widows as paramount, and the application to the facts and circumstance of each case of s.7 and the approach established by Singer v Berghouse . Preconceptions and predispositions are likely to be the source of inadequate consideration of the process required by the Family Provision Act 1982 .
[19]In the application of the test in s 7, and of the exposition thereof in Singer v Berghouse by Mason CJ, Deane and McHugh JJ at 409-411 it would be an error to accord to widows generally primacy over all other applicants regardless of circumstances and regardless of performance of the stages of consideration described in Singer v Berghouse, in full and with reference to the instant facts. Defeat of the opponents' claims does not necessarily follow from a demonstration, which the claimant can make, that all her needs with respect to income, home renovation, and provision for contingencies cannot be met if any provision is made for the opponents; indeed she could well demonstrate that even if the provisions of the will took effect without any modification, the provision for her is not adequate. That is not a demonstration that no claim by an eligible person can succeed; the claims and circumstances of the opponents also have to be weighed, and they too have their needs and merits."
Interestingly Ipp J adopted this in paragraph 1 of his judgment and also said as follows at [1] - [2]:
"I agree with Bryson JA, for the reasons his Honour has stated, that 'it would be an error to accord to widows generally primacy over all other applicants regardless of circumstances and regardless of performance of the stages of consideration described in Singer v Berghouse (1994) 181 CLR 201...'
I would add, however, that where competing factors are more or less otherwise in equilibrium, the fact that one party is the elderly widow of the testator, is permanently unable to increase her income, and is never likely to be better off financially, while the other parties are materially younger and have the capacity to earn more or otherwise improve their financial position in the future, will ordinarily result in the needs of the widow being given primacy. That is simply because, in such circumstances, the widow will have no hope of improving herself economically, whereas that would not be the position of the others. In that event, the need of the widow would be greater than that of the others."
Stein AJA agreed with both judges.
Reference was also made in submissions as to what was said in Easterbrook v Young (1976-1977) 136 CLR 308. There the High Court was dealing with a widow's claim and made the following comments (at 324):
"... The learned judge expressed the view, with which we agree, that the appellant's entitlement on intestacy did not constitute adequate provision for even proper maintenance. He went on to say that, had he been free to do so, he would have ordered that she receive a life estate in the remaining asset in the estate with power in the respondent to sell the cottage and purchase other suitable accommodation. In this respect we are unable to agree that such an order would have constituted adequate provision for her maintenance. Her claim upon the estate is paramount to that of her sons. She was in financial need at the date of the deceased's death; that need is still considerable and is likely to increase in the future. The asset which remains is not of great value and we think that nothing less than an absolute interest in the property would constitute adequate provision for the appellant. She may then realize its value and obtain for herself some other abode within her financial competence to maintain."
The comments made by the High Court about the paramountcy of her claim have to be seen in the context of the facts of that case where it was plain that the widow had no means and was in receipt of an aged pension. Her sons who were the competing claimants had put no evidence of their financial situation before the court.
I turn therefore to the consideration of a number of factors, which should be taken into account in deciding whether in the circumstances of this case bearing in mind the widow's claim to retain her dwelling, the plaintiffs have been left without adequate and proper provision for their maintenance, education and advancement in life.
In respect of one of the plaintiffs, namely Kim, it is abundantly clear that he is in a very sound financial situation and indeed a situation comparable or perhaps even better given his cash reserves than that of his step mother, Catherine. His large cash reserves mean that the payment to him of $125,000 is, in his personal situation, of no consequence. In my view, he has not demonstrated that he has been left without adequate and proper provision for his maintenance, education and advancement in life.
The claims of the children were put forward on the generic basis that they needed some buffer for the future.
Given the small provision asked for, namely $125,000 for each child, it is abundantly plain that such amount would go to satisfy real needs for the remaining six children whether it be to discharge liabilities or to make their situation in life less stressful.
The first defendant, Catherine, has a life expectancy of 20 years. A suggestion that there be some charge to be paid by the sale of the property or the death of Catherine was criticised as it did not respond to an immediate need of the plaintiffs. This raises two questions, the first being whether the house is likely to be sold and the second being whether, if it is not likely to be sold, that provision is appropriate.
On the first question, it is clear that the cash reserves of Catherine will only allow her to remain in the house for perhaps two or three years if the level of expenditure which she has forecast continues over the next few years. Her alternatives are to increase her income or reduce her expenditure. The only way this can be done realistically is by letting out the main house with Catherine living in the small flat which is hardly an achievement of her own aim to enjoy the benefits of the matrimonial home which had a large part to play in the long life she had with the deceased.
One of the matters obviously concerning the defendant was the enormous effect that the global financial crisis in 2007-2008 had on the value of the home. It fell from having a value of $10 million at the date of death to a present value of $7 million. It is understandable that Catherine may wish to retain the home in the hope that the property will increase in value to make her situation far more comfortable when she does decide to sell.
The ages of the six children are such that although they are now in difficult circumstances with some worse than the others they will probably be able to continue for some years and the provision of funds for them at that time will be as useful as it would be now.
The provision of funds of this amount, namely, $750,000, can be comfortably accommodated if the property is sold as there will be sufficient left for Catherine to purchase a more appropriate residence but still of high quality and keep sufficient funds to enable her to fund her future life.
Although there is no evidence of what will be the cost of a smaller residence the decrease in size will free up substantial funds. Furthermore the fact that Kim's property, which is large enough for him to live in with his wife and two children, is valued at $3.5 million provides a strong indication that Catherine could obtain suitable accommodation in Mosman for approximately half of the current value of the Quakers Road property.
Given the life expectancy of Catherine if the matter is allowed to drift on well into the future some of the children may not survive their present position and the value of their benefits will be eroded. Also, it seems, that the expenses in maintaining the property for Catherine will soon be beyond her means.
The "Family concerns" document signed by Catherine is not enforceable given the lack of any time scale for the sale. At most it records Catherine's then present intention and does not bind me or indeed assist in the decision I have to make.
The life Catherine had with the deceased was one where they brought up their adopted child and for most of the relationship Catherine did not work. The lifestyle they enjoyed was one usually enjoyed by the wealthy. The previous income is not available now and life has changed for Catherine given the deceased's death. She will still be able to have a good residence and have a reasonable level of funds for her support after some provision for the children.
In my view, an appropriate resolution is to provide legacies for the six children of $125,000 each payable in three years' time or earlier sale of the property. This will give Catherine time to see if there will be an improvement in the property market. Given such a decision the legacies should not be indexed due to a possible non-improvement of the property market.
Designation of notional estate
I need to consider the appropriate questions in respect of the designation of the property as notional estate.
The relevant prescribed transaction, which is alleged under s 23(b)(iii) of the Family Provision Act is the failure of the deceased to sever the joint tenancy. By the combined effect of s 22(1)(a)(i), (4)(b) and (5) there will be a prescribed transaction if the deceased omits to sever the joint tenancy immediately before death and full valuable consideration in money or money's worth is not given for the omission of the deceased to do that act (s 22(1)(b)).
In Wade v Harding (1987) 11 NSWLR 551 Mr Justice Young, as he then was, concluded on the facts of that case "what was forgone in not severing the joint tenancy was received by continuing to be a joint tenant." This conclusion appears to be because he formed the view that immediately before death the deceased had an equal chance with the joint tenant of benefiting by the jus accrescendi.
In Cameron v Hills (NSWSC, Needham J, 26 October 1989, unreported) described that approach in these terms:
"With great respect to his Honour, I find it difficult to see how a joint tenant, about to die immediately, can be said to have an equal chance of surviving the other joint tenant. The Court must look at the position the moment before death. Whatever may have been the facts in that case justifying the conclusion, there are no such facts in this case. Immediately before the death of this deceased there was no rational prospect of his surviving the defendant. Accordingly, in my opinion, no valuable consideration in money or money's worth was given for the omission of the deceased to sever the joint tenancy."
Needham J's approach has now been followed in the court of appeal (see Cetojevic v Cetojevic [2007] NSWCA 33).
Provided that a deceased has suffered some injury, had a medical problem or set in train some sequence of events as a result of which death ensues then, like Needham J, I would normally conclude that there was no rational prospect of the deceased surviving his co-tenant. In the present case the deceased was 17 years older than Catherine and was suffering from illnesses, which was about to cause his death. In these circumstances I would conclude that no valuable consideration was given and thus there is a prescribed transaction and thus one half of the property can be designated as notional estate.
Section 27 of the Family Provision Act is in the following terms:
"(1)On an application in relation to a deceased person, the Court shall not make an order designating property as notional estate of the deceased person unless it has considered:
(a)the importance of not interfering with reasonable expectations in relation to property;
(b)the substantial justice and merits involved in making or refusing to make the order; and
(c)any other matter which it considers relevant in the circumstances.
(2)In determining what property should be designated as notional estate of a deceased person, the Court shall have regard to:
(a)the value and nature of property the subject of any relevant prescribed transaction or distribution from the estate of the deceased person;
(b)where, in relation to any such prescribed transaction, consideration was given, the value and nature of the consideration;
(c)any changes over the time which has elapsed since any such prescribed transaction was entered into, any such distribution was made or any such consideration was given in the value of property of the same nature as the property the subject of the prescribed transaction, the distribution or the consideration, as the case may be;
(d)whether property of the same nature as the property the subject of any such prescribed transaction, any such distribution or any such consideration could, during the time which has elapsed since the prescribed transaction was entered into, the distribution was made or the consideration was given, as the case may be, have been applied so as to produce income; and
(e)any other matter which it considers relevant in the circumstances."
As far as the substantial justice and merits of the application are concerned, I have canvassed some of these above. A holistic judgment deciding whether or not the plaintiffs have been left without adequate and proper provision has involved consideration of these matters and there is nothing additional which I wish to say on this aspect. The importance of not interfering with reasonable expectations has been raised in the extension of time application. However, the main question is whether there are any reasonable expectations engendered before the date of death. There were a number of statements by the deceased to his children that they would benefit under his will and the extent of the provision that was made did not match those expectations. Given the length of the time of the second marriage, I would have thought that any of the children's expectations based on such statements in this regard would not be reasonable.
There are no other particular matters that require consideration under s 27(2).
The court also has to consider the question, which arises in these circumstances, under s 28(5). In Cetojevic v Cetojevic [2006] NSWSC 431 Campbell J said:
"[76]Thus, I turn to the question of whether there are "other special circumstances", within section 28(5)(d).
[77] The case law shows that no exhaustive account of what counts as "special circumstances" has been attempted to be given. Previous decisions have held them to include incapacity as a result of infancy (Dare v Furness (1997) 44 NSWLR 493; Stojcesvska & Tosevski v Tosevski [2001] NSWSC 274 at [45]), and the strength of an applicant's claim (including her financial and other contributions to the assets of the Deceased), together with the fact that it was through no fault of hers that her application was not made within the prescribed period (Stojcesvska & Tosevski v Tosevski [2001] NSWSC 274 at [46]). They are not limited to the types of circumstance which are expressly mentioned in section 28 or circumstances closely analogous to them: Lewis v Lewis [2001] NSWSC 321 at [85]. I also venture to repeat the remarks I made in Application of O and P [2005] NSWSC 1297 at [57]-[60] concerning the phrase "special reasons" in section 101(5) Adoption Act 2000:
"[57]It is fairly common for legislation to confer a power on a court to adopt some course of action if there are "special reasons". In Jess v Scott (1986) 12 FCR 187 the Full Federal Court (Lockhart, Sheppard and Burchett JJ) considered a provision which allowed a court "for special reasons" to permit an appeal out of time. They said, at 195, that what that rule required was:
"... that there be shown a special reason why are the appeal should be permitted to proceed, though filed after the expiry of twenty-one days. In that context, the expression "special reasons" is intended to distinguish the case from the usual course according to which the time is twenty-one days. But it may be so distinguished (not necessarily will, for the rule gives a discretion) wherever the Court sees a ground which does justify a departure from the general rule in the particular case. Such a ground is a special reason because it takes the case out of the ordinary. We do not think the use of the expression "for special reasons" implies something narrower than this.
...
It should not be overlooked that r 15(2) enables leave to be given "at any time"; the "special reasons" relevant to such a power cannot but describe an elastic test, suitable for application across a range of situations, from an oversight of a day to a neglect persisted in during a prolonged period. It would require something very persuasive indeed to justify a grant of leave after, for example, a year; equally, it may be said, something much less significant might justify leave where a party is a few days late. "Special reasons" must be understood in a sense capable of accommodating both types of situation. It is an expression describing a flexible discretionary power, but one requiring a case to be made upon grounds sufficient to justify a departure, in the particular circumstances, from the ordinary rule prescribing a period within which an appeal must be filed and served. "
See also, to similar effect, Minister for Community Services & Health v Chee Keong Thoo (1988) 78 ALR 307 at 324 per Burchett J; Holpitt Pty Ltd v Varimu Pty Ltd (1991) 29 FCR 576; (1991) 103 ALR 684 at 686-7 of ALR per Burchett J.
[58] This meaning of "special reasons" now been decided by the Court of Appeal in Director-General, Department of Community Services v The Adoptive Parents [2005] NSWCA 385 to be applicable in section 101(5). At [44]-[46] Giles JA said:
"[44] In Baker v The Queen [2004] HCA 45 [(2004) 210 ALR 1; (2004) 78 ALJR 1483] Gleeson CJ said (at [13]) -
"There is nothing unusual about legislation that requires courts to find "special reasons" or "special circumstances" as a condition of the exercise of a power. This is a verbal formula that is commonly used where it is intended that judicial discretion should not be confined by precise definition, or where the circumstances of potential relevance are so various as to defy precise definition. That which makes reasons or circumstances special in a particular case might flow from their weight as well as their quality, and from a combination of factors."
[45] In the same case Callinan J said (at [173]-[174]) that "special reasons" shared the characteristics of which Lord Bingham spoke in relation to "exceptional circumstances" in R v Kelly (2000) QB 198 at 208, that -
"We must construe 'exceptional' as an ordinary, familiar English adjective, and not as a term of art. It describes a circumstance which is such as to form an exception, which is out of the ordinary course, or unusual, or special, or uncommon. To be exceptional a circumstance need not be unique, or unprecedented, or very rare; but it cannot be one that is regularly, or routinely, or normally encountered."
[46]Barrett J took up these observations in Application of R M and E S M, re Y at [12], saying that the court could only act "if it positively finds some factor or circumstances related to the best interests of the child that is out of the ordinary course, unusual, special or uncommon and that is not regularly, routinely or normally encountered". I respectfully agree; but it would be a mistake to attempt to define or categorise what might be special reasons related to the best interests of a child."
[59]In exercising a power which is able to be exercised where there are "special reasons", "doubtless the discretion of the Court is very large, and necessarily so; but it must have as its basis some circumstance which it can reasonably regard as "special reasons" for lifting the particular" circumstance out of the usual: Gourlay v Casey (1927) 38 CLR 586 at 591 per Isaacs, Gavan Duffy and Powers JJ.
[60]When the Court comes to exercise the discretion under section 101(5) from time to time,
" ... a discretion to relax the requirement of general rules should not itself become entangled in a web of rules spun out of the Court's discretionary decisions. The tendency in some of the decisions we have discussed to regard a particular factor considered previously, in the light of other circumstances, as requiring the same effect to be given to it in the different situation before a court on a later occasion is a temptation which a court should resist. Decisions are not authorities upon the facts but upon principles; the facts must be regarded as unique to the particular case."
(per Lockhart, Sheppard and Burchett JJ, Jess v Scott (1986) 12 FCR 187 at 196).
[78]In my view, a similar approach should be taken to the phrase "special circumstances" in section 28(5)(d) Family Provision Act 1982.
[79]I will assume without deciding, that the structure of the Act requires there to be more demonstrated to prove "special circumstances" than to justify an extension of time under the Act. Even on that assumption, here there is, in my view, considerably more. The defendant is a widow with two very young children. She has no real estate whatsoever. The only investment of her husband was his superannuation, which is quite small in amount, and his interest in this property. The equity from her own home unit has gone towards it. As well, the unusually close family relationships which there were during Nenad's life are a most important factor. This family was not only emotionally close, but their financial affairs were very closely intertwined as well. There was a pooling of assets, in a way which would make it, in my view, unjust for the estate to lie where the legal interest in it has fallen through the chance operation of the law of survivorship. The fact that the estate is all notional also adds to the special circumstances. "
The view assumed by Campbell J in [79] above was not accepted by White J in Campbell v Chabert-McKay [2010] NSWSC 859. At [85] - [89] his Honour said the following:
"[85] In Cetojevic v Cetojevic [2006] NSWSC 431 Campbell J (as his Honour then was) assumed without deciding (at [79]) that more is required to establish "other special circumstances" under s 28(5)(d) than is required to obtain an extension of time under s 16.
[86] I accept that more is required to establish "other special circumstances" under s 28(5)(d) than would be required to obtain an extension of time. But I do not agree that to establish such other special circumstances the court is to exclude circumstances considered under s 16. Mr Willmott stressed that the plaintiff needed to establish not just special circumstances, but other special circumstances to justify the making of an order designating property as notional estate.
[87] In my view "other special circumstances" are not special circumstances other than those considered under s 16 or s 8. Section 16 requires the court to have regard to all the circumstances of the case in deciding whether to extend time. This must include any special circumstances. Similarly, if an application is made for additional provision under s 8, the court is required by s 9(3)(d) to consider any circumstance it considers relevant.
[88] The scheme of s 28(5) is that the circumstance described in s 28(5)(c) is to be regarded as a special circumstance. When s 28(5)(d) refers to "other special circumstances" it is referring to special circumstances other than that referred to in s 28(5)(c). Thus, in s 28(5)(d), the incapacity of an applicant is described as a special circumstance. But incapacity would have to be relevant to the exercise of discretion under s 16 whether to grant an extension of time.
[89] For these reasons, I do not accept that matters relevant to the decision to extend time under s 16 are excluded from consideration under s 28(5)(d)."
His Honour then went on to quote a part of Baker v R [2004] HCA 45; (2004) 223 CLR 513 referred to by Campbell J in Cetojevic v Cetojevic at [13] and noted that a circumstance may be special by way of degree as well as of kind.
The plaintiffs suggest that the representations made by Catherine in May 2008 and repeated in December 2009 that she would sell the Quakers Road property and distribute at least $200,000 to each of the plaintiffs constitutes special circumstances. They also point to the fact that the property has not been dealt with since the death of the deceased and that the only person having an interest in the estate is Catherine Allchin.
Given that a claim is not made for more than that which was promised, I would consider that this does give rise to special circumstances.
Orders
(1) The time for the second, third, fourth, fifth, sixth and seventh plaintiffs to bring their application is extended to 2 June 2011;
(2) I refuse to extend time in relation to the application of the first plaintiff;
(3) One half of the first defendant's property at Quakers Road, Mosman is designated as notional estate of the late James Frank Charles Allchin to the extent necessary to satisfy order (4) and any costs order;
(4) In lieu of the entitlements of the second, third, fourth, fifth, sixth and seventh plaintiffs in the will of the deceased, each is to receive a legacy of $125,000 to be paid at the earlier occurrence of:
(i) The passing of three years from the date of these orders; or
(ii) The sale of the first defendant's property at Quakers Road, Mosman;
(5) I will hear submissions on costs.
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Decision last updated: 10 September 2012
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